The housing market is cratering and unless the administration can increase employment or new subsidies, a double dip in home prices may lie ahead.

Economists painted that dire picture yesterday following the surprise collapse of new home sales. May produced 33 percent fewer deals for new homes, the worst month on federal record.

That bad news came just a day after another gloomy industry report said owners of existing homes aren’t having much luck in selling their homes in order to acquire new places. A third of those scarce deals came from foreclosures.

Experts believe the bogged-down housing industry will limp along for months because few deals will emerge when consumers are worried about their jobs. While interest rates of 30-year mortgages are at 50-year lows and sellers are eager to make deals, the missing link remains payroll growth.

“We see no chance of a quick sustained recovery, though we are hopeful there is little further downside,” economist Ian Shepherdson of High Frequency Economics wrote in a report, adding that “the next few months are likely to be very grim.”

Unemployment, stuck at just under 10 percent, clouds the picture. States “with very high rates of unemployment also have large stocks of unsold homes,” said economist Robert Brusca of Fact & OpinionEconomics.

The expiration of Uncle Sam’s $8,000 tax credit for first-time homebuyers also hurt sales, as many expected.

“We fear that the appetite to buy a home has disappeared alongside the tax credit,” said economist Paul Dales of Capital Economics.

Many experts said the May sales drops also snuffed out a modest recovery in home prices. Prices for new homes fell 9.6 percent in May to $200,900 from a year earlier.